Ethereum ETFs in Canada

Cryptocurrency is one of the most exciting pieces of technology to come out of the 21st century. As soon as the value of Bitcoin exploded in 2011, then again in 2013, it seems like everyone jumped on the crypto bandwagon. Today, there are many cryptocurrencies available, but Ethereum is currently number two after Bitcoin. For this reason, ETFs backed by Ethereum have become available in 2021. In essence, Ethereum ETFs, or other crypto ETFs, are mainly backed by a cryptocurrency. If you’re interested in buying an Ethereum ETF in Canada, continue reading to learn more about the investment and which options are best for your portfolio. 

Ethereum ETFs in Canada

What does an Ethereum ETF mean? 

First things first, ETF stands for exchange-traded fund. These are investment funds that are publicly traded on a stock exchange. ETFs can be backed by any asset, such as cash, stocks, bonds and even cryptocurrency. Many investors pool their money together within an ETF and the money is used to invest in various markets. Although, many ETFs have an area of specialty, such as tech, money markets or gold.

An Ethereum ETF is an exchange-traded fund that is backed by the cryptocurrency, Ethereum (ETH). Currently, Ethereum is the second largest cryptocurrency in the world, only second to Bitcoin. Ethereum is an open-source, decentralized blockchain that utilizes smart contract technology. The blockchain was founded and created by Vitalik Buterin.

CIBC Investor’s Line Offer

Up to $6.95 per online stock or ETF trade. Plus, there’s no minimum account balance.

Keep in mind that owning an Ethereum ETF is not the same as owning Ethereum. With an Ethereum ETF, you own a share of a large pool of the ETH cryptocurrency. Whereas when you own Ethereum, you solely own the cryptocurrency. So why bother investing in an Ethereum ETF when you can just invest in Ethereum? The idea is to pool lots of money with other investors to purchase a larger quantity of Ethereum. Whereas on your own you wouldn’t be able to purchase nearly as much of the cryptocurrency.

Does Canada have Ethereum ETF? 

Yes! Canada does offer some Ethereum backed ETFs for interested investors. We’ll explore potential options further below, but the main ones are Purpose Ether ETF, Evolve Ether ETF, CI Galaxy Ethereum ETF and 3iQ CoinShares Ether ETF.

Related Reading: Is Bitcoin Legal in Canada?

Top 4 Ethereum ETF in Canada

The top 4 Ethereum ETFs in Canada are listed below. Continue reading for more information on each investment.

ETHH1.48%$242M CAD
ETHR0.75% (plus sales taxes)$51M USD
ETHX0.81%$305M CAD
ETHQ1.61%$18M USD
All values current as of August 2023.

1. Purpose Ether ETF (ETHH)

The inception of Purpose Ether ETF was April 20, 2021 and the ETF officially launched on October 1, 2021. The fund’s goal is to replicate the performance of Ethereum, less the ETF’s expenditures. The fund is primarily invested in Ethereum. ETHH is publicly traded on the Toronto Stock Exchange (TSX). 

2. Evolve Ether ETF (ETHR)

Evolve Ether ETF has an inception date of April 19, 2021. The fund is 100% invested in Ethereum and has a high risk level. ETHR is available for purchase on the Toronto Stock Exchange (TSX). However, you can also purchase ETHR on the Montreal Exchange (TMX). 

3. CI Galaxy Ethereum ETF (ETHX)

Founded on April 16, 2021, ETHX is managed by CI Financial’s subsidiary Galaxy Digital Capital Management LP. The ETF is invested 99.96% in Ethereum with the remaining in cash and cash equivalents. The CI Galaxy Ethereum ETF is available for buying and selling on the Toronto Stock Exchange (TSX). 

4. 3iQ CoinShares Ether ETF (ETHQ)

3iQ is among Canada’s first digital asset management companies. The CoinShares Ether ETF was incepted on April 22, 2021. The fund’s objective is to provide exposure to the Ethereum digital currency and provide an opportunity for long-term capital appreciation. The ETF is available to trade on the Toronto Stock Exchange (TSX). 

Related Reading: Bond ETF vs Stock ETF: Which is better?

What is the best Ethereum ETF to buy?

The best Ethereum ETF to buy would be Evolve Ether ETF (ETHR) because it has the lowest fee compared to the other options. This is important because each ETF listed above aims to match the performance of Ethereum, but the management expense ratio is taken out of your profits. The higher the cost is, the less profits you’ll be left with. In addition, the higher the management expense ratio is, the better off you’d be investing directly into Ethereum from a quantitative perspective.

Otherwise, the funds are all high risk and are nearly 100% invested in Ethereum. Aside from the quantitative factors, you may want to consider the reputation of the management company. Also, the historical performance of the company, even though you only have about two years to go on. 

How to Buy Ethereum ETF in Canada 

Purchasing an Ethereum ETF in Canada is quite similar to purchasing any other ETF. You will require funds to buy the ETF and a trading account. Here’s the step by step process on how to buy an Ethereum ETF in Canada: 

  • Open a trading account. If you don’t have one already, open a trading account, such as Questrade vs Wealthsimple or with your favorite bank. Make sure you have access to the desired stock exchange, for instance, the TSX.
  • Fund your trading account. Transfer cash to the trading account and wait for the funds to arrive. This can take a few business days to process, especially if it’s your first cash deposit.
  • Choose your Ethereum ETF. While you wait for the cash to arrive, select the Ethereum ETF in Canada you’d like to buy. Based on how much cash you are willing to invest, determine how many units you can purchase. Don’t forget to consider the transaction fees!
  • Place an order. Once the cash is ready and you know what you want to buy, it’s time to place an order.
  • Wait for the transaction to settle. Sometimes it can take a few business days for the transaction to settle. Be patient as it can take some time for the investment to officially appear in your trading account too.

Congratulations – you now own Ethereum ETFs!

CIBC Investor’s Line Offer

Up to $6.95 per online stock or ETF trade. Plus, there’s no minimum account balance.

Can I buy Ethereum on TSX?

You cannot purchase Ethereum on the TSX, but you can purchase Ethereum ETFs on the TSX.

All four options listed above are publicly traded on the Toronto Stock Exchange (TSX). More specifically, you can purchase Purpose Ether ETF (ETHH), Evolve Ether ETF (ETHR), CI Galaxy Ethereum ETF (ETHX), and 3iQ CoinShares Ether ETF (ETHQ) on the TSX. 

Related Reading: Types of ETFs in Canada

Advantages of Investing in Ethereum ETF in Canada

  • Available in TFSA and RRSP. You cannot invest in Ethereum and other cryptocurrencies using your TFSA or RRSP. However, you can invest in an Ethereum ETF using your TFSA or RRSP.
  • High reward. Ethereum ETFs in Canada are all high risk investments. This does present the opportunity for high returns, but you might see a lot of ups and downs before reaching real profits.
  • Diversification. Investing in cryptocurrency may be a great way to diversify your portfolio.

Disadvantages of Investing in Ethereum ETF in Canada

  • High risk. Cryptocurrency is still a volatile and unstable investment in Canada. Much of the uncertainty has yet to be ironed out which means you could lose a lot of money on Ethereum ETFs. 
  • Crypto legitimacy. As of the time of writing, cryptocurrency is not considered legal tender. In addition, it is not accepted or regulated by major banks in Canada. Furthermore, none of the big five banks are offering Ethereum ETFs yet, only the smaller investment firms. This takes away from the legitimacy of cryptocurrency – proceed with caution.
  • May not be safer than investing directly into Ethereum. Purchasing an Ethereum ETF is essentially pooling your money with other investors to purchase Ethereum in bulk. You might be better off investing in Ethereum directly since you won’t have to pay a fee and the risk level is most likely similar. 

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Ethereum ETFs in Canada: Final Thoughts

Cryptocurrency is an exciting new technology, but it still has a long way to go before it’s stable and reliable. For this reason, cautious investors should think carefully about investing in Ethereum ETFs as it might not be suitable for their risk appetite. On the other hand, investors with a high risk appetite may be more comfortable investing in Ethereum ETFs. In fact, many cryptocurrency pioneers feel strongly about the future of this new technology and swear it’ll be a lucrative investment in the years to come. Whether or not you decide to invest in Ethereum ETFs, good luck on your investing journey!

Read More: Best Cryptocurrency ETFs in Canada for 2023

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